The moment of truth
à 16:07:31, 05.03.2012
MARCH 5, 2012 6:00 P.M. | by JACQUES ATTALIFrancois Hollande's 75 percent tax rate proposal for those with annualincome of more than EUR 1 million is both totally impractical and extremelyuseful.Unworkable because no one among the very few people involved, will accept,without fleeing the country, the confiscation of three-quarters (actually4/5ths) of what they earn, whether justified or not; because it would taxonly success and not inherited wealth; and because, to arrive at this ratioof tax on higher incomes, a massive increase of taxes on all income,starting from a very low level will be needed.Extremely useful also because this proposal reveals that, due to the extremegravity of the situation of public finances, everyone must be heavilyinvolved.In other words, it is because the incumbent president has not controlledpublic expenditure and because he stubbornly reduced taxes for the richest,using tax loopholes, that his successor will be obliged to take very brutalmeasures.The real fiscal data of the country are otherwise unknown, and (as shown inthe Spanish case, where a lot of public spending have been obscured anddelayed by the State), it is likely that the French public finances are alsoin a far more disastrous state still than they say: we will wake up probablyin the aftermath of May 6, in a moment of truth, with a disastroussituation, that the markets, that is to say our lenders, will be eager tomake us feel.In my opinion, to achieve the modest objectives announced by the leadingcandidates (a balanced budget at the end of the next presidential term), wemust find at least 20 billion by 2012 and 30 billion in 2013. [...]
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